How many dollars are hidden under the bed?

VnnNews – Economists agree that people are holding large volumes of foreign currencies, but no one can say for sure how much.

VnnNews – Economists agree that people are holding large volumes of foreign currencies, but no one can say for sure how much.

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Before Tet, Nguyen Van Hung, a car dealer in Hanoi, spent five billion dong to purchase dollars on the black market.

One third will go to his daughter, who is studying at Oxford University in the UK, while the other two-thirds will be put into his coffer at home.

“My daughter will study for five years at the university, which will cost some five billion dong. I decided to keep dollars because I worry that the dong will depreciate,” Hung remarked. 

It is very difficult to reckon how many parents there are like Huy, but it is clear that the number is very big. Statistics from four embassies (US, UK, Australia and Singapore) alone showed that tens of thousands of Vietnamese students are studying at schools in the four countries. The cash sent abroad for the students must be very large.

Vietnamese people also keep dollars for many other purposes. They buy dollars to make payments on imported cars, pay for iPods, or simply to store in their piggy-banks at home. These practices have caused the so-called “dollarization” of the national economy.

Chief Economist of the World Bank in Vietnam, Martin Rama, explained people do not feel secure about the dong/dollar exchange rate. People keep dollars, believing this is the best way to protect their assets.

How many dollars are Vietnamese people keeping? This is the question Le Dang Doanh, a renowned economist, has raised. Doanh said that he and other economists, including the Deputy Chair of the National Finance Supervision Le Xuan Nghia once sat together to guess how much dollars are being kept by considering many factors, including the national foreign currency reserves, foreign debts, overseas remittance, foreign direct investment, exports and the declared foreign currencies in the banking system.

“We were surprised to estimate $9.7 billion. This sum of dollars is not in bank accounts, which means that it is being held by the people,” Doanh noted, adding that this means Vietnam does not lack foreign currency.

Rama agrees that Vietnamese people are holding on to billions of dollars.

Deputy Head of the Central Institute for Economic Management Vo Tri Thanh calculated that, with the current foreign currency reserves plus some $20 billion kept by commercial banks, Vietnam would have more than $30 billion. This sum, plus the dollars held privately at home, proves that Vietnam does not lack dollars.

Source: Thoi bao Kinh te Vietnam

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